Legal News

Tempers Simmering at Big AIG/Starr Trial

By Ashby Jones

It’s hard to know exactly whom to focus on on any given day in the AIG/Starr trial, which is about to start its third day. Earlier in the week, it was all about the opening arguments of the superstar courtroom lawyers, Paul Weiss’s Ted Wells, representing AIG, and Boies Schiller’s David Boies, handling the work for Starr. (Click here for a nice recap of the opening statements earlier in the week from the American Lawyer’s Andrew Longstreth.)

On Tuesday, it was former AIG chief Maurice “Hank” Greenberg (pictured) who stole the spotlight.

The backdrop: AIG is trying to wrest away control of more than $4.3 billion from Starr, for the money Starr got from selling off tens of millions of AIG shares in recent years, as well as 185 million AIG shares Starr has held for years. AIG says the shares were supposed to be used to compensate AIG employees, as they were for decades when AIG and Starr were sister companies. Starr argues it could use the shares as it wished, and it has invested much of the money it earned from share sales in recent years.

On Tuesday, Greenberg testified that Starr’s voting shareholders believed they had lost “control” of AIG after Greenberg left in 2005. As a result, shareholders, including Greenberg, canceled a deferred compensation plan for select AIG executives. Greenberg said Starr, which he now heads, retained the right to cancel the plan and doing so wasn’t a violation of the fiduciary duty of the voting shareholders.

According to the WSJ story, Tuesday’s action was not without its drama. Greenberg, 84 years old, occasionally flashed impatience. At various points when Wells, asked him about a 1992 document he had signed that pertained to Starr, Greenberg responded, “That’s what it says.”

But according to the WSJ’s Liam Pleven, who sent us some observations Tuesday afternoon, the session included some pointed reminders that there’s another important high-profile lawyer in court: US District Judge Jed Rakoff.

After Wells and Boies examined the first witness, a long-time AIG employee, Rakoff admonished the two attorneys because he felt they were being argumentative about the way they posed questions about documents introduced as evidence.

“This is a very strict court, and we will play by the rules,” Rakoff said.

Photo: Bloomberg

Full post as published by Law Blog - WSJ.com on June 17, 2009 (boomark / email).